Daniel Gladiš discussed Vltava Fund’s approach to investing in the banking sector and presented his investment thesis on OSB Group (UK: OSB) at European Investing Summit 2024, held from October 29-31, 2024.
Two Years On: Premium members, scroll down for an automated review of how this thesis played out from October 2024 to October 2026.
Thesis Summary
OSB Group is a leading specialist mortgage lender that focuses primarily on carefully selected sub-segments of the UK mortgage market.
The bank specializes in the buy-to-let segment, in which it has 9% UK market share. The big banks consider this market too labor-intensive and have exited it. Buy-to-let lending is less risky than mortgages to homeowners. LTVs of 65% and cost of risk of 0.25% prove this.
OSB is fully funded with deposits, has a cost-to-income ratio in the 30s and is completely focused on its niche market.
Since its IPO in 2014, book value has grown 18% per annum.
With ROEs in the mid-teens, the shares deserve a higher market valuation than a P/E of 4.5x and P/B of 0.7x, especially as shareholders enjoy regular large dividends and the benefits of below-book value share repurchases.
Slide Presentation
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